An executor plays a significant role in managing an estate after the owner’s death. They are essential, especially if you have a lot of assets you’ll be leaving with your family. Appointing the right executor ensures your legacy is distributed appropriately. Learn what it means to be an executor and how you can choose the right one.
What Is an Executor of an Estate?
An executor manages the estate of a deceased person. These people are named in the deceased person’s will and are responsible for recording assets and distributing them to the rightful beneficiaries. These assets can include cash, real estate, investments, jewelry, artwork, and collectibles. Executors cannot generally distribute joint property.
Executors can also be beneficiaries, meaning they could carry out the Will and receive part of the estate. There can also be more than one appointed executor. Without a Will, the court will appoint an “administrator” to take the job. The court may also appoint an administrator if the executor backs out or cannot fulfill their duties. The court also has a responsibility to approve appointed executors. The court must determine whether the Will is valid and will review the assets that the executor shall distribute.
If the deceased person created an estate plan to avoid probate, such as through a living trust, it’s possible not to need the court’s approval when distributing the assets.
What Does an Executor Do?
Estate planning involves identifying the people or organizations who you want to inherit your estate. The role of an executor in estate planning is to ensure that the beneficiaries get what is rightfully theirs. The executor will also manage the bills and debts you leave behind, using some assets as payment. However, depending on the wording of the Will, there might be limitations on the executor’s ability to pay certain bills with estate assets. Without a Will, the state’s intestacy law will determine how to distribute the assets.
The executor of the estate’s responsibilities can be heavy and taxing. Executors can work with professionals, such as a probate attorney or a Certified Public Accountant (CPA), to help with the work. Hiring professionals can also lead to a quicker estate administration process. Estate administration typically lasts for a few months to a few years.
Responsibilities Before Death
The duties of an executor of an estate start during the appointment. Once you select an executor, they should discuss the Will with you and the beneficiaries to avoid future conflict. You should also discuss the instructions for the funeral, burial, or cremation.
The executor should know how to access the original Will and asset list. The asset list will make recording and distributing the assets easier. You can leave the Will with an attorney. It’s not advisable to leave the Will in a safe deposit box because the executor will have to hire an attorney to obtain a court order to open the box, which can delay the process. That said, the executor should also know the attorneys or agents working with you and have their contact details.
Responsibilities After Death
The executor should obtain copies of the death certificate in case third parties, such as banks and insurance firms, ask for them. The executor should also contact relevant agencies, such as the Social Security Administration, the IRS, and state tax authorities, to inform them of your passing. This stops the benefits and enables the government to impose inheritance taxes on estates of a certain value, if necessary. The executor should also provide an official notice to creditors.
To begin payments, the executor should locate the assets and identify any remaining debts. When recording the assets and their potential value, the executor should refer to the Internal Revenue Code. A CPA can help make the work easier.
The executor can perform accounting informally if all parties, including beneficiaries, agree that accounting before the court is unnecessary. The record should include the executor’s commissions, though executors typically waive commissions if they are also family members. Accounting may not be necessary if the spouse is the sole executor and sole beneficiary, or if it’s waived.
The executor should ensure that all debts are paid. Otherwise, the executor needs to pay these debts through the deceased person’s assets. There are some limitations when it comes to payment of debts or bills related to real estate. If the real estate is part of the deceased peron’s estate, then the debts and bills can be paid with estate assets. However, if the real estate is not part of the estate, there are strict limitations on what types of debts and bills can be paid. The executor is better off paying debts before distributing the inheritance to avoid having to refund some of the assets due to a lack of payment.
The executor isn’t necessarily personally liable if the assets aren’t enough to cover the debts. The Court can discuss how to move forward. That said, the executor can be held accountable for any gross negligence or mismanagement. Opening an estate bank account — a temporary bank account — can be helpful in managing debt and paying dues.
Who Should You Name as an Executor?
Appointing an executor is a huge decision. You can choose a spouse, family member, close friend, lawyer or financial institution to be an executor, and you can appoint more than one individual.
Here are the ideal traits of an executor:
- Trustworthy: Trust is a huge factor, as executors will be responsible for your assets. You need someone you know will distribute the inheritance to your loved ones.
- Organized: Executors need to be organized because they will be dealing with multiple bills, bank accounts, and other transactions. They need to be able to account for all of your assets properly.
- Resilient: Conflicts can arise between beneficiaries, and beneficiaries can accuse executors of not fulfilling their obligations, so resilience is beneficial.
Given that the work is taxing, a backup executor is handy in case your primary executor backs out. However, having multiple executors can also be a cause for conflict. At the very least, the executor should be at least 18 years old, of sound mind, and without previous felony convictions.
Do You Really Need an Executor?
An executor can be beneficial if you have many assets to leave to your family. If you don’t appoint one, a court will likely provide an administrator. Appointing one yourself allows you to choose someone you can trust and know to be responsible enough to handle all your assets.
Family members are typically appointed as executors, but you can also work with banks or lawyers to make the process more efficient. However, expect banks and lawyers to charge commissions or legal fees. While the law states that executors are entitled to commissions, family members and friends often waive the commission. They can also choose to work with professionals during the process.
Secure Your Assets With Crow Estate Planning & Probate
Let Crow Estate Planning & Probate give you peace of mind. Estate planning can be rigorous, but you don’t have to get lost in all its complexities on your own. We’ll help you write your Will and name your executor and beneficiaries. We understand how important it is to ensure your assets are distributed to your loved ones, so we offer personalized solutions. Schedule an appointment today to get started.
